Item 2. Management's Discussion and Analysis of Financial Condition and Plan of
Operations.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about the Company's
business, financial condition and prospects that reflect management's
assumptions and beliefs based on information currently available. There can be
no assurance that the expectations indicated by such forward-looking statements
will be realized. If any of management's assumptions should prove incorrect, or
if any of the risks and uncertainties underlying such expectations should
materialize, Las Vegas Railway Express, Inc., actual results may differ
materially from those indicated by the forward- looking statements.

The key factors that are not within the Company's control and that may have a
direct bearing on operating results include, but are not limited to,
managements' ability to raise capital in the future, the retention of key
employees and changes in the regulation of our industry, as well as the risk
factors identified in the Company's Annual Report on Form 10-K for the year
ended March 31, 2012, filed with the SEC on July 10, 2012.

When used in this Report, words such as, "believes," "expects," "intends,"
"plans," "anticipates," "estimates" and similar expressions are intended to
identify and qualify forward-looking statements, although there may be certain
forward-looking statements not accompanied by such expressions. However, the
forward-looking statements contained herein are not covered by the safe harbors
created by Section 21E of the Securities Exchange Act of 1934.

The following discussion should be read in conjunction with our consolidated
financial statements and notes thereto included elsewhere herein.

Business Overview

Las Vegas Railway Express, Inc. (the "Company", "we", "us", or "our") is a
Delaware corporation whose business plan is to establish a rail passenger train
service between Las Vegas and Los Angeles using existing railroad lines
currently utilized by two Class I railroads, Burlington Northern and Union
Pacific. Our goal is to provide a Las Vegas style experience on the train (which
we plan to call the "X" Train), which would traverse the planned route in
approximately 5 hours. We plan to operate a single travel route marketed
primarily to a leisure traveler from the Southern California basin enabling us
to sell rail travel as a stand-alone operation with hotel rooms and other travel
related services. Our unique travel option will offer a diversified product that
will set us apart from travel related options of automobile and air.

The Company is in discussions with both the Union Pacific Railroad and the BNSF
Railway seeking to secure rail trackage rights agreements. The Company has
reached a preliminary agreement with Union Pacific Railroad awaiting
finalization of the BNSF agreement and certain capital planning issues. An
updated capacity planning and feasibility analysis has been completed for Union
Pacific and we are in final discussion with respect to this with BNSF. The
Company is negotiating an agreement with Amtrak to provide Train and Engine
employees to operate the locomotives and train movements of the Company over the
route between Los Angeles and Las Vegas. The Company has executed an MOU with
AMTRAK outlining duties and responsibilities of each party which will be
incorporated into the final Amtrak agreement. The Company has executed a
Memorandum of Understanding (or MOU) with the Plaza Hotel as a Las Vegas station
site and has a similar pending agreement with the City of Fullerton for use of
that station for the Los Angeles terminus of the service. The Company estimates
that it will need to obtain a minimum of $150 million in additional capital to
begin operations of its planned train service. The Company intends to seek to
raise these funds through the public or private sale of equity and/or debt
securities. There has been an agreement signed with nationally recognized
investment banker but there is no assurance such funding will be available on
terms acceptable to the Company, or at all. If the Company succeeds in raising
such funds, it intends to use them for railcar purchase, design, refurbishment
and outfitting, Las Vegas depot design and construction, lease payments, UP and
BNSF mileage fees, salaries and other professional fees and also information
technology and corporate infrastructure development. Subject to obtaining needed
funding, the Company estimates that the train service will start in 4rd quarter
of 2013.

On November 8, 2012 the Company entered into agreement related to Las Vegas
Railway Express, Inc. operations on Union Pacific Railroad's property. Prior to
commencing operations of the train service, the Company will also need to secure
the agreement with BNSF. Additionally, we will have to finalize our haulage
agreement with Amtrak.

The Company entered into a consulting agreement with Rail Enterprises, Inc.; and
with their expertise purchased 10 rail cars on August 22, 2010, 2 cars on
October 12, 2012, and 2 cars on November 2, 2012.

The Company's common stock is currently quoted on the OTCQB under the symbol
XTRN. The company website is www.vegasxtrain.com. The contents of this site are
not incorporated in this Report.

The Company has been pursuing contracts with AMTRAK, Class 1 railroads and
potential site locations for station development. The Company has entered into a
Memorandum of Understanding with AMTRAK for its train operations on January 13,
2011. This AMTRAK Agreement outlines the terms of the operations tasks which are
the responsibilities of each party. The Company has negotiated the procurement
of bi-level railcars needed for its train consists. The planned service is
targeting a start date for late 2013. The Company has also entered into a
feasibility and capacity planning agreement with Union Pacific Railroad.
Burlington Northern Santa Fe has completed its feasibility and capacity planning
study on behalf of the company. The Company has entered into a memorandum of
understanding with the Plaza Hotel for use of a segment of their property as a
passenger railway station in Las Vegas.

Compensation expense increased by $1,243,925, or 500%, during the quarter ended
December 31, 2012 as compared to the quarter ended December 31, 2011. The
increase was primarily due to the impact of non-cash stock based compensation
offered to employees in connection with implementation of our business
plan. Selling, general and administrative expenses increased by $158,649, or
306%, during the quarter ended December 31, 2012 as compared to the same period
in 2011 primarily due to increases in director and officers' insurance and
travel expenses related to raising capital. Professional fees increased by
$435,254, or 672%, during 2012 as compared to 2011 due primarily to increases in
legal fees, consulting services, accounting and financial advisory related to
the implementation of the business plan and raising funds. Interest expense was
lower during 2012 due to debt holders agreeing to convert their notes payable to
equity. Income tax expense in 2012 was due to the deferred tax liability related
to goodwill.

The following is a comparison of the consolidated results of operations for the
nine months ended December 31, 2012 and 2011.

Compensation expenses increased by $1,835,797, or 239%, during the nine months
ended December 31, 2012 as compared to the nine months ended December 31,
2011. The increase was primarily due to the impact of non-cash stock based
compensation offered to employees in connection with implementation of our
business plan. Selling, general and administrative expenses increased by
$325,734, or 236%, during the nine months ended December 31, 2012 as compared to
the same period in 2011 primarily due to increases in director and officers'
insurance and travel expenses related to raising capital. Professional fees
increased by $825,491, or 379%, during 2012 as compared to 2011 due primarily to
increases in legal fees, consulting services, accounting and financial advisory
related to the implementation of the business plan and raising funds. Interest
expense was lower during 2012 due to debt holders agreeing to convert their
notes payable to equity. Income tax expense in 2012 was due to the deferred tax
liability related to goodwill.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support asset growth,
satisfy disbursement needs, maintain reserve requirements and otherwise operate
on an ongoing basis. The Company has no operating revenues and is currently
dependent on financing and sale of stock to fund operations.

The accompanying financial statements have been prepared assuming that we will
continue as a going concern. As shown in the accompanying financial statements,
we had a net loss of $3,664,050 for the nine months ended December 31, 2012 and
an accumulated deficit of $15,473,582 through December 31, 2012. Although a
substantial portion of our cumulative net loss is attributable to lack of
revenue, management believes that it will need additional equity or debt
financing to implement the business plan. These matters raise substantial doubt
about our ability to continue as a going concern.

We estimate that it will need to obtain a minimum of $150 million in additional
capital to begin operations of its planned train service. We intend to raise
these funds through the public or private sale of equity and/or debt securities.
There has been an agreement signed with a nationally recognized investment
banker but there is no assurance such funding will be available on terms
acceptable to the Company, or at all. If we succeed in raising such funds, we
intend to use them for railcar purchase, design, refurbishment and outfitting,
Las Vegas depot design and construction, lease payments, Union Pacific Railroad
("UP") and BNSF Railway Company ("BNSF") mileage fees, salaries and other
professional fees and also information technology and corporate infrastructure
development. In addition, approximately $56 million will need to be paid to UP
to procure operating rights for the Company on the UP route between Daggett, CA
and Las Vegas, NV.

On April 27, 2012 the Company commenced a private offering of common stock to
accredited investors to raise interim funds (initially up to $1.5 million,
subsequently increased to $2.5 million) pursuant to a private offering
memorandum. As of December 31, 2012 the Company has received gross proceeds of
$2,282,000 from the sale of 45,640,000 shares of common stock pursuant to the
private offering.

The accompanying financial statements do not include any adjustments related to
the recoverability and classification of assets and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.

We continue to actively pursue various funding options, including equity
offerings and debt financings, to obtain additional funds to continue the
development of our products and bring them to commercial markets. There can be
no assurance that we will be able to consummate any fund raising transactions on
terms acceptable to us or at all.

We believe that the successful growth and operation of our business is dependent
upon our ability to do the following:

- obtain adequate sources of debt or equity financing to pay unfunded
operating expenses and fund long-term business operations; and
- manage or control working capital requirements by controlling operating
expenses.

There can be no assurance that we will be successful in achieving our long-term
plans as set forth above, or that such plans, if consummated, will enable us to
obtain profitable operations or continue in the long-term.

Cash Flows

Net cash used in operating activities for the nine months ended December 31,
2012 was $1,747,899 as compared to net cash used in operating activities for the
nine months ended December 31, 2011 of $851,810. The primary reasons for the
differences between our net loss of $3,664,050 and net cash used in operating
activities for the nine months ended December 31, 2012 were the non-cash stock
issued for compensation and services of $1,118,670, the non-cash issuance of
warrants for services of $1,181,071, a decrease in our derivative liability of
$20,824, a reduction of liabilities of discontinued operations of $584,014 and
increases in accounts payable and accrued expenses of $85,281. The changes in
assets and liabilities compared to 2011 related to the timing of payments for
operating items, primarily payroll.

Cash used in investing activities during the nine months ended December 31, 2012
were expenditures of $944,610 consisting of $322,472 for the purchase of rail
cars and other capitalized costs towards the project, $8,124 in office
equipment, $14,192 in software related costs, and a deposit of $600,000 with
Union Pacific pursuant to an operating agreement signed. We did not have any
significant cash used in investing activities during 2011, as the Union Pacific
agreement was signed in 2012, and we are now getting closer to becoming
operational, which requires additional investment.

Net cash provided by financing activities was $2,971,000 for the nine months
ended December 31, 2012 consisting of $2,282,000 from the proceeds from the sale
of common stock, $705,000 in proceeds from issuance of notes payables, and
$9,000 from the exercise of warrants, offset by repayments of $25,000 payment
for a note payable. This compares to December 31, 2011 which had cash provided
by financing activities of $871,586, consisting primarily of proceeds from sale
of stock of $383,253 and proceeds of notes payable of $488,333.

Management currently believes that cash flows from current and future equity
investments will be sufficient to meet the Company's liquidity and capital needs
at least through fiscal 2013.

New Accounting Pronouncements:

On July 27, 2012, the FASB issued Accounting Standards Update ("ASU") 2012-02,
Intangibles - Goodwill and Other (Topic 350). ASU 2012-02 allows companies to
initially use a qualitative approach to assessing whether goodwill or other
long-lived assets have been impaired. If companies determine qualitatively that
goodwill or other long-lived assets have not been impaired, a quantitative test
is not required. Companies can bypass the quantitative test if desired, and
still perform the quantitative test. It is effective for reporting periods
beginning after September 15, 2012. The Company previously adopted the goodwill
portion of this ASU, and has now early-adopted this ASU for the year ending
March 31, 2013. There was no impact from the adoption of this ASU.

Critical Accounting Policies

The preparation of our consolidated financial statements and notes thereto
requires management to make estimates and assumptions that affect the amounts
and disclosures reported within those financial statements. On an ongoing basis,
management evaluates its estimates, including those related to revenue
recognition, workers' compensation costs, collectibles of accounts receivable,
and impairment of goodwill and intangible assets, contingencies, litigation and
income taxes. Management bases its estimates and judgments on historical
experiences and on various other factors believed to be reasonable under the
circumstances. Actual results under circumstances and conditions different than
those assumed could result in differences from the estimated amounts in the
financial statements. There have been no material changes to these policies
during the fiscal year.

Intangible and Long-Lived Assets

We follow Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") Topic 360, "Property Plant and Equipment", which
establishes a "primary asset" approach to determine the cash flow estimation
period for a group of assets and liabilities that represents the unit of
accounting for a long lived asset to be held and used. Long-lived assets to be
held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset. Long-lived assets to be disposed of are
reported at the lower of carrying amount or fair value less cost to sell.

Goodwill is accounted for in accordance with ASC Topic 350, "Intangibles -
Goodwill and Other". We assess the impairment of long-lived assets, including
goodwill and intangibles on an annual basis or whenever events or changes in
circumstances indicate that the fair value is less than its carrying value.
Factors that we consider important which could trigger an impairment review
include poor economic performance relative to historical or projected future
operating results, significant negative industry, economic or company specific
trends, changes in the manner of our use of the assets or the plans for our
business, market price of our common stock, and loss of key personnel. We have
determined that there was no impairment of goodwill during 2012 or 2011.

Stock-Based Compensation

As required by the Stock-based Compensation Topic of FASB ASC, transactions in
which the Company exchanges its equity instruments for goods or services is
accounted for using authoritative guidance for stock based compensation. This
guidance also addresses transactions in which the Company incurs liabilities in
exchange for goods or services that are based on the fair value of the Company's
equity instruments or that may be settled by the issuance of those equity
instruments.

If the Company issues stock for services which are performed over a period of
time, the Company capitalizes the value paid in the equity section of the
Company's financial statements as it's a non-cash equity transaction. The
Company accretes the expense to stock based compensation expense on a monthly
basis for services rendered within the period.

We use the fair value method for equity instruments granted to non-employees and
will use the Black-Scholes model for measuring the fair value of options, if
issued. The stock based fair value compensation is determined as of the date of
the grant or the date at which the performance of the services is completed
(measurement date) and is recognized over the vesting periods.